Officials warn of cartels, lack of competition
NBS Governor Radovan Jelašić says that prices in Serbia are higher compared to western European cities.
Tuesday, 04.09.2007.
13:04
NBS Governor Radovan Jelasic says that prices in Serbia are higher compared to western European cities. The central bank chief agreed with Finance Minister Mirko Cvetkovic that the price hikes had been caused by production and retail monopolists, adding "certain cartels" had formed in the domestic market. Officials warn of cartels, lack of competition The price of a loaf of bread has risen 13.4 percent since September 1. The price of milk and dairy products has also gone up. The largest dairies, Belgrade’s Imlek and Novi Sad Dairy, said that the latest price rises had been brought about by the increase in the basic price of milk, in turn a consequence of the drought. “I am very surprised to see that the same products cost more here than in other European countries,” Jelasic said. “Serbia obviously has a problem with the way in which retail prices are being formed. Producers, suppliers and retail store representatives gather to agree on the trade margins for each product,” he argued. “It is not Valued Added Tax (VAT) that is to blame for the fact we have to pay twice the price for the same product here than in Frankfurt, for example, but rather the fact there is no competition in Serbia,” Jelasic told B92. The Competition Commission has been operating in Serbia for a year and a half. Commission President Dijana Markovic-Bajalovic told B92 that they believed the increase in retail process of bread, cooking oil, meat and milk came as a result of "a certain degree of manipulation and abuse". “The Commission can determine that misuse of a dominant position is at work, when a producer or retailer that ranks high in the market, charges a high price for its products,” she said. “A cartel is formed if certain producers and retail chains agree over prices. A penalty fine of between 1 and 10 percent of annual profits is set for the company or companies in question.” Jelasic said that the cabinet had not as yet had a serious discussion regarding the monopoly issue. According to him, competition is the most efficient means of suppressing monopolist behavior. “One thing is for sure, prices here are higher than in central European states, even though salaries in Serbia are lower,” the central bank governor concluded said. Even with the recent price hikes, economists believe that the inflation rate in Serbia will not spiral out of control this year. Experts from the Center for High Economic Studies (CEVES) said that the 1.2 percent increase in August was related to agricultural products, and pointed the figer at this summer's drought. An economist dealing with quarterly analysis of the financial market in Serbia, stated that the August rise was a result of a supply, rather than demand anomaly, so the trend is unlikely to continue. Experts believe that the base inflation rate, which in August reached its highest figure since November 2005, will stabilize again at a lower level and will remain at between four and five percent in December. The base inflation rate measures price increases that are not under direct state control, and has been at about three percent all year, while the total inflation rate for the year through the end of August was 6.3 percent.
Officials warn of cartels, lack of competition
The price of a loaf of bread has risen 13.4 percent since September 1. The price of milk and dairy products has also gone up.The largest dairies, Belgrade’s Imlek and Novi Sad Dairy, said that the latest price rises had been brought about by the increase in the basic price of milk, in turn a consequence of the drought.
“I am very surprised to see that the same products cost more here than in other European countries,” Jelašić said.
“Serbia obviously has a problem with the way in which retail prices are being formed. Producers, suppliers and retail store representatives gather to agree on the trade margins for each product,” he argued.
“It is not Valued Added Tax (VAT) that is to blame for the fact we have to pay twice the price for the same product here than in Frankfurt, for example, but rather the fact there is no competition in Serbia,” Jelašić told B92.
The Competition Commission has been operating in Serbia for a year and a half. Commission President Dijana Marković-Bajalović told B92 that they believed the increase in retail process of bread, cooking oil, meat and milk came as a result of "a certain degree of manipulation and abuse".
“The Commission can determine that misuse of a dominant position is at work, when a producer or retailer that ranks high in the market, charges a high price for its products,” she said.
“A cartel is formed if certain producers and retail chains agree over prices. A penalty fine of between 1 and 10 percent of annual profits is set for the company or companies in question.”
Jelašić said that the cabinet had not as yet had a serious discussion regarding the monopoly issue.
According to him, competition is the most efficient means of suppressing monopolist behavior.
“One thing is for sure, prices here are higher than in central European states, even though salaries in Serbia are lower,” the central bank governor concluded said.
Even with the recent price hikes, economists believe that the inflation rate in Serbia will not spiral out of control this year.
Experts from the Center for High Economic Studies (CEVES) said that the 1.2 percent increase in August was related to agricultural products, and pointed the figer at this summer's drought.
An economist dealing with quarterly analysis of the financial market in Serbia, stated that the August rise was a result of a supply, rather than demand anomaly, so the trend is unlikely to continue.
Experts believe that the base inflation rate, which in August reached its highest figure since November 2005, will stabilize again at a lower level and will remain at between four and five percent in December.
The base inflation rate measures price increases that are not under direct state control, and has been at about three percent all year, while the total inflation rate for the year through the end of August was 6.3 percent.
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